The Black Swan
📅 Finished on: 2023-10-12
You cannot predict major unexpected events, but you will try to explain them after the fact. Do not fall for biases and be wary of Gaussians and models that simplify reality without accounting for black swans
A classic, recommended after the good experience with Antifragile. I have to say I enjoyed it slightly more, but Taleb, even though he writes in a fairly amusing and light way, becomes really monotonous after a while. I struggle with him over the long run. His thoughts mostly refer to a business sphere where statisticians have created very complex models (starting from the Gaussian, his number one enemy) in economics, but it can be applied in everyday life. It depends on the category: you will not have a Black Swan in the average height of the population (Mediocristan), but you can have it in the sales of a book (Extremistan). See more notes at https://www.nateliason.com/notes/black-swan-nassim-nicholas-taleb
Notes
Black Swans are events with enormous impact, unpredictable, and that we tend to render “predictable” after they have happened. Economic crises, eruptions, earthquakes, sales records, scientific breakthroughs, etc.
Exploration of our biases: for example, in hindsight we think Black Swans were predictable, but in truth we cannot predict them. The turkey story is exemplary: every day it receives food and thinks it will always be that way, until Christmas day when everything ends abruptly. In hindsight we understand it was predictable, but for the poor turkey the Black Swan was unthinkable.
Another example: when markets go up, the news will say it is thanks to X; if they go down, it is always X’s fault (it was something like the arrest of Saddam Hussein). A huge bias we have. Explaining black swans.
So the gist is: do not fall into the fallacy of creating explanations for what happens; major events are unpredictable. So all the statistical theories, the Gaussian distributions he criticizes, and various models are only approximations of reality that will fail at the next unexpected event. (very controversial, I see, but it makes sense) Missing a train is only painful if you run after it, if you allow yourself to care. avoid trying to predict the future and live it.
What else can you do? Well, do not get into areas where you need an unexpected event to break through (writer, chef, etc.), Taleb advises, and above all you can make a 90% safe mix and small bets that, if they catch a black swan, give you great upside (he calls it the barbell strategy, more of a financial thing).